MEDIA RELEASE
FOR
IMMEDIATE RELEASE
27 March, 2000
GOVERNMENT PLANS TO ENCOURAGE SUPERANNUATION
WELCOMED
The Investment Savings & Insurance Association, Chief
Executive, Vance Arkinstall, said, the industry welcomed today’s announcement by the
Minister of Finance, Dr Cullen, which reinforces that long-term savings are important to
the Government and New Zealanders.
"The Government announcement provides much needed
encouragement for high income earners to contribute to locked-in employer-sponsored
superannuation schemes through salary sacrifice arrangements and allows them to benefit
from the lower 33 cent tax rate," says Mr Arkinstall.
"Just as important is Dr Cullen’s statement that
Government intends to address the long standing problem that savers earning less than
$38,000 are taxed at 33% on savings, which is significantly higher than their actual
marginal tax rate. This has been a disincentive for low income earners to save which the
industry has been pressing to have addressed for some time," said Mr Arkinstall.
"Today’s announcement represents a sound balance
between encouraging high income earners to save through employer superannuation and
protection against abuse of the taxation system. The approach is simple, it will assist to
increase genuine superannuation savings by higher income earners without loading
additional costs and complexity on employers," said Mr Arkinstall.
"We are pleased that earlier proposals to protect against
abuse of the taxation system have not been adopted as they would have resulted in
limitations on the level of contributions and would have created additional cost and
complexities for those employers providing superannuation to their staff," Mr
Arkinstall added.
"Over the years employer-sponsored superannuation has
suffered from numerous changes, each leading to cost and complexity on employers. This has
contributed in no small part to the decline in the number of employer-sponsored
superannuation schemes. The Government’s announcement is the first positive sign for
many years that employer superannuation is an important avenue for savings which is
encouraged by Government," Mr Arkinstall said.
Ends
Vance Arkinstall
Chief Executive
ISI
